Some days, I still feel like pinching myself. I never thought a middle-class gal like me would end up owning a vacation home in Fiji.
I’m here right now, lounging on the hanging bed that looks out over the sparkling South Pacific. I’ve just finished up a quick snack of fresh, juicy, sweet pineapple that my housekeeper prepared for me. I spend a few weeks here like this every year. Honestly, I could spend more time here, lazing around and enjoying this view, but I’d rather the extra income that comes from renting the house out.
My home is rented, on average, between 80% and 85% of the time. It usually brings in about $50,000 a year, although it varies with world events and weather issues.
Many folks automatically assume they can’t afford a vacation rental, based on their income. But before you start hyperventilating at the thought of taking on a $1 million-plus mortgage, keep my number one rule in mind—buy low, rent high. You don’t need to spend anywhere close to a million dollars for a property that could earn you high rental yields.
Spend $100,000 to $200,000…or whatever you’re comfortable spending. This isn’t Lifestyles of the Rich and Famous. I wasn’t a wealthy investor looking for opportunities when I bought my home in Fiji. I simply saw a bargain and jumped on it.
I took the same money I could have used to purchase a two-bedroom, two-bathroom condo on the outskirts of any midsized American city and turned it into a dazzling vacation home that people are happily paying me up to $450 a night for.
That’s the magic of earning with vacation rentals. You purchase residential real estate and then charge hotel prices.
I was perusing some real estate websites just the other day, and I spotted an affordable two-bedroom, two-bathroom home with a pool for sale in a cosmopolitan beach town in the Dominican Republic. Despite a strong vacation rental market, the home was selling for just $132,000. It just needs some freshening up, some professional photos to show it off, and it could be a real money maker.
When I started renting out my home in Fiji, I’m embarrassed to say, my first guests spent a month here with no television, no radio, and no phone. Internet? Wasn’t even a possibility. Getting on the internet just 11 years ago, required a trip into town, walking to the second story of an insurance salesman’s office, and sitting at his desk while you waited (and waited) for dial-up. And they still had a wonderful holiday.
Since then, I’ve added a lot of amenities to my vacation rental. Some additions were out of necessity to keep up with the times (we only added internet two years ago) while others, like the covered hanging bed, were to add vacation appeal.
There are lots of little things you can do to up the wow factor for your guests…and many of them won’t cost you a penny. I’ve set up a connection with a masseuse and the guests can book directly with her. It doesn’t cost me anything, but it’s one of the reasons vacationers will pick my rental over other’s. You could set up similar connections with a personal chef or a yoga instructor willing to come give private lessons. The results of these small efforts can provide a real impact on your yearly income.
It’s easy to research what services you should be offering to be more competitive. Just check out vacation rental websites like HomeAway or FlipKey and see what other people are offering in your area. In Fiji, it’s a given that you’re going to have daily housekeeping service. At just $2 an hour, it’s too affordable not to. In other areas where this service is pricier, you could offer a free mid-week clean or give them the option to have that indulgence and pay extra.
Most people don’t shop based on price, they shop based on value for experience. So, make it an easy decision and offer them everything they need to have an exceptional experience.
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